tv Worldwide Exchange CNBC May 20, 2015 4:00am-6:01am EDT
combined fines could top $5 billion. >> u.k. retail in a rut. shares slip as a sharp outlook overshadows better than expected earnings. marks and spencer also in the red as the share buy back fails to impress. good morning and welcome to worldwide exchange. let's have a quick peak of where your dollar is trading. the big news obviously that came yesterday but today germany's ppi down 1.5% on the year. that's a weaker number than expected. i wonder if we're looking at the euro dollar exchange rate right now, 11114. how vulnerable is the euro dollar to raise in yields again. what if we see the bond yields
right now. currently 60 basis points. does the ecb come in and use verbal intervention. >> absolutely. very interesting point that the euro dollar moved like an equity over the last six months. we saw it correct. we saw it come back away from 104, 105 handle and it it is moving really off the back of the ecb comments that you just mentioned yesterday. interesting to also point the german bund. for once we saw u.s. bond yields and european bond yields move in different directions yesterday. so once we started to see the
correction we saw global con contagion. i wonder if there's a little bit of a decoupling. >> and housing data. all time highs in april. >> all eyes will be on the fed minute. >> telco stocks on the move. the deal values the 7th largest u.s. cable provider at $9.1 million and signals a move into the u.s.telecom's market. let's get to stefen in paris. >> good morning. it is valued at more than $9 million but altice will pay only a small amount for this acquisition because it has a huge amount of data. it will finance this acquisition and pay $1.2 billion in cash
while most of the transaction will be financed by southern link with $6.7 billion of new and existing debt. in a statement altice opens in that strategy avenue for a french company in the united states. just think that it may be only a first step. it's no secret that altice has great ambitions when it comes to mna. according to the wall street journal they held negotiations with time warner cable after the merger plan with comcast fell apart last month. however, time warner cable might be too big. it has a market capitalization of $44.5 billion but the french company managed to enter the u.s. market at the limited cost and that explains the very positive market reaction. >> thank you very much for that. we're going to stick with the telco sector. let's look at cable and wireless
down 3% in london today. slumping after the company posted it's first revenue rise since a demerger in 2010. they reported top line growth and pretax loss of $1 billion which narrowed from $98 million last year. earlier squawk box europe spoke to phil bentley and asked for his thoughts. >> it just shows that the sector is pretty hot at the moment because you have mobile companies buying cable tv and cable tv trying to merge and it's all about this fixed mobile convergence where you can access broadband through either your mobile phone or fixed line networks and people want content on the go and it's why we did our com deal at the end of the fiscal year. >> john malone said the tie up between the two telcos would
make a great fit. it's a day after they announced a full drop in operating profit. metro in germany is up 2%. it's getting a boost on speculation of acquisition of its department store chain. annetta is live in frankfurt with the latest. >> well the latest here is an austrian real estate owner has put in a bid for the department store chain of metro for 2.9 million euros and that's the second bid that austrian player made for the department store chain. in 2011 he already for the first time was bidding for kaufhof but back then reportedly the price wasn't right and now people are
saying that this could be close to the price metro wants for the department store chain. the new bidder is actually a very likely successor or player who might actually have success in a bid for the kaufhof department chain because he's already owning the other big department store chain in germany. so it was more or less a tragedy. that was taken over by the austrian real estate owner but a merger between two biggest department store chains might actually make them more profitable. pack to you. >> thank you so much for that. moving on the nikkei closing out a new 15 year high after the economy grew at the fastest pace in a year. first quarter annualize gdp
beating out expectations of 1.5%. this thanks to a boost in inventories but it wasn't all positive although you could argue boosts from inventories isn't that positive either. still came in long forecasts. meanwhile bonds moved higher on the back of the growth surprise. joining us to discuss japan's outlook further is the principle chief economist at japan macro advisors. we had a little time to ingest the gdp numbers and the inventory build that was the main driver for gdp in the first quarter. it's a bad quality number isn't it? >> i wouldn't say that. inventory does go up and down. it has been particularly volatile but what's important is look at how the private consumption is doing. how the capital expenditure is doing. let's look at the final demands and when you see that we do see
consumption growing steadily at the 0.3, 0.4% on the quarterly rise. that's more than 1% growth. that's good for japan and capital expenditure, yes, it wasn't as good as expected but it still grew. it still grew for the first of time in that quarter. so overall today's number was a pretty good number for japanese gdp. >> can you extrapolate that for the rest of the year. what we've seen in the past q-4 was revised downwards quite dramatically. do you think that q-1 will see a sizable downward revision? and do you think japan can keep up the pace? >> right. well might be but i think inventory build up of 0.5% contribution, that might have been a little bit of overestimation. so it could be revised down but even then i expect japan to grow by 1% this year 2% next year and that's definitely higher than japanese potential so that
will help bank of japan diminish deflation. >> i'm going to take a little bit of a different start here because i don't really think it was such a positive number overall. sure we saw exports boosted but domestic demand element was still pretty weak as carolyn already mentioned there was a big factor of inventories building up as opposed to fundamental demand and inflation data is still weak as well given the extraordinary stimulus we've seen surely this number is quite disappointing. >> well, depends on where you're coming from but 0.6% growth. annualized rate of 2.4% is well above japan's potential growth and of course if we are to exceed negative growth next year say a rebound of the build up this quarter yes that will be disappointing but i can see
growth the rest of the year. i would expect japan would continue to grow. there's no negative factor unless there's negative events in the rest of the world. >> okay. let's agree to disagree here. thank you so much for that. principal chief economists at japan macro advisors. they doubled a recall tied to potentially faulty air bags to 34 million vehicles in the united states. making it the biggest recall in american history. the move involves passenger and driver side air bag inplateflators and shares of the air bag manufacturer fell over 11% this morning in tokyo.
>> thank you very much. let's have an update on what european markets are doing this morning. we're broadly flat. just below flat. down about 0.2% on the stoxx 600. this follows a very strong rally in european equities. yesterday we saw the dax and the cac rally more than 2% after those inflation naryary comments. those qe comments. yesterday the ftse 100 was up 0.4%. it's down 0.2. the dax and cac off 0.4. net still up quite nicely. italy down 0.4% as well. >> let's look at rates. we surveillance sawaw that european qe trade go back up again. and of course bond buying of course in germany.
we had gone back up to 0.7% last week. we're now below 0.6 again. 0.58%. that was different from the move we saw in the u.s. bond yield yesterday which did hit the high for 2015. we're sitting at 2.25% today. we're looking at 9.5% in the moment. quick look at commodity rates as well. we're seeing a nice rally in the oil price. initially because they were weak and we expected a demand supply rebalancing. the last couple of weeks has been driven by the u.s. dollar coming off which helped oil prices again and even though the u.s. dollar has been strengthening again we see om strength in oil prices. >> let's talk banks ubs is set
to pay $545 million in fines to settle a u.s. probe into alleged riggings of currency markets. it includes a $203 million penalty for its role in manipulating. jp morgan chase and city are expected to face fines as the u.s. department of justice and u.k. regulators are set to levy more than $5 million worth of penalty. a lot of uncertainty was removed from ubs. that was an overhang with regards to the u.s. justice department investigation. the fine isn't that big. some analysts say they got off lightly but what i do want to point out is the fact that the department of justice ripped off the nonprosecution agreement because they said look actually, you've cheated so many times. you manipulated so much we're not going to have you not get
punished for what you did. so that was a surprise over the last two weeks. >> as you say the market thought the fine could be bigger. still a lot of fines to see what's going to happen to the other banks. it is interesting that debate. they had a nonprosecution agreement although it did apply to one particular area but i don't think we'll see public opinion or up roar because of that. banks remain public enemy number one and it does suggest moving forward whether other people won't come forward. but overall i think ubs will be pretty cleezed as the share price suggests. they can try and draw a line under this themselves and focus back on core strategy rather than these fines. >> the big one to watch out for is barclays. we could expect a fine announced over the next hours or days because they're also settling with u.k.-u.s. regular you laytors.
we're live in barcelona discussing the use of uav's sometime police force. >> and etsy reports a massive loss. that's after the break. >> going from bad to worse, what made this auto riders day turn from a dream into a nightmare behind the wheel. stay tuned to find out. it's so shiny. i know, mommy, but it's time to let the new kitchen get some sleep. if you want beautiful results, you know where to go - angie's list. now everyone can get highly rated service even without a membership. you can shop special offers or just tell us what you need and we'll help you find a local company to take care of it. angie's list is there for all your projects, big and small. pretty. come see what the new angie's list can do for you.
investors failing to cheer solid earnings for marks and spencer today. they had the first profit in four years and announced a share buy back but some analysts suggest the buy back fell shy of expectations. meanwhile luxury goods grew. burberry with a 70% rise in profit but they cut guidance warning over increased uncertainty in some markets. shares down by almost 4% in london trading. biggest fall in the stock since october of 2014 and apparently they changed some of the pricing in the month of april as a result of the changes. very strong dollar. you have a little bit of strength in the pound. you have the weakness in the euro. you would think they have some hedging in place and some natural hedges too but they modify the pricing you could
even buy back. >> well i'm not sure a burr berry coat is my thing but i think it is interesting on the burbury front. obviously the market taking it bad because of the comments in the management meeting on guidance and also just a little side point that didn't have a huge impact on the numbers but they also mentioned the fact that those protests in hong kong had quite a big effect because that high end brand has a lot of shares in china and hong kong. on the marks and spencer issue this is potentially a watershed turning point. they have a profit. they have their first buy back since november 2007 but it's been a long and slow process to get to this point and of course people won't be extrapolating too far as to whether this is the new trend.
>> he invested more than 2 million pounds in the turn around of the country. maybe now that we're on the verge of the turn around people are talking about his leaving because essentially he's managed the turn around. maybe he has. maybe he hasn't. but that's usually a good time for ceos to leave. >> i'm not sure that they're now talking about leaving. it's not sure whether this turn around is sufficient to keep his place. everything against him. food retail is a nightmare space. more high end fashion retailer than some others and of course online threat that they have been behind. so you know it's been a tough time but they have taken a long time to sort it out out. >> first buy back is positive even if the number was lower. >> indeed. now meanwhile on the retail front state side walmart shares closed 4% lower after the world's biggest retailer missed on its bottom line. courtney has the wrap of earnings in the sector. >> you have to do your homework. the world's largest retailer and
world's largest home improvement retailer turning in quite different quarters. walmart misses by a penny on the bottom line. 7% below last year on revenue of $114.8 billion lower than last year and about a billion and a half shy of analyst estimates. shares did improve 1.1%. it was the third straight quarter of improvement though shy of expectations. traffic also improved. >> walmart is struggling internally and grocery and store experience as well as externally. the strong dollar, consumers saving and paying down debt and diverting spending to categories like home improvement also hurting sales. home depot benefitting from the recovering housing market u.s. same store sales up a strong
7.1%. etsy reports and investors doing their best to understand the details. posting revenues of $59 million in line with expectations and posting a loss of 84 cents per share but that loss isn't exactly comparable on an accounting basis to the 3 cent gain that analysts were expect expecting they have 20.8 million active buyers and 1.4 million active sellers. it does note a continued strong dollar will likely hurt international sales they plan to increase hiring and marketing this quarter. >> let's pick up and talk a little bit about the etsy earnings results. i'm a little upset that seema is not here. she has been bullish on the stock and i have been bearish. >> why. >> anyone like amazon or ebay will be able to threaten what
they offer. it's not unique enough for me in term of online marketplace. >> because you're not crafty. >> certainly but i think others might be able to get into the market but that's not why these earnings were disappointing. interesting, though along side alibaba counterfeits becoming an issue for these types of players. >> absolutely i'm a little more positive about the stock because they have good international presence. they have good mobile presence too. international visits yes they are flat in the latest earnings report because of the dollar impact and yes they warned about that but i believe 30% of their clicks is coming from overseas. if they can grow that number the stock could have a little bit of upside. but, you know it's fallen quite drastically when it doubled but since then the stock is still up 30%. >> it is. except anyone that didn't get an
allocation in the ipo is losing money because of that immediate jump. anyone that's been trading has been on the slide since. the only other thing as well to add on this is the valuations we see on these online retailers are so high and they're often making a loss. if someone like amazon is making a loss as well think of how much money they're investing to keep it going these smaller players are going to struggle unless they're totally, totally different and yes they have a difference but i don't think it's dependable. anyway we're going to have to quickly move on and talk about flashes that we're getting out. he says a trigger for earlier rate hikes could be in core inflation moved up substantially or sustainable unemployment rates came in at 5%. he did say there's a lot of uncertainty uncertainty if the natural rate of unemployment is at 5%. so interesting comments. we will continue of course to
mna drives. telco stocks fire. while liberty boss john malone talks up the benefits of buying vodafone. it's a muted stop as gdp surprises to the upside with the fastest growth. >> ubs tops the swiss markets after it settles it's liable case with u.s. authorities. all eyes on barclays. combined fines could top $5 billion. >> u.k. retail in a rut. shares slip as a sharp outlook overshadows better than expected earnings. marks and spencer in the red despite a profit rise as the share buy back fails to impress. >> all right let's have a quick look at euro dollar once again. another slide earlier in the trading session today but we
have recovered. the euro dollar at 11105. that slide had to do because of the ppi numbers in germany that were weaker than expected. the big slide came yesterday on the back of the comments about front loading some of the qe comments. let's have a look at sterling as well. a big dip yesterday on the back of the deflation print in the u.k. for the first time in 55 years and we're just getting boe minutes. sterling dollar at 15498. what are we seeing. >> we got the bank of england minutes from the last meeting, a 9-o 0 vote to keep interest rates unchanged at 0.5%. that's largely as we're expecting. that was the same as last month although last month the minutes were a little more hawkish than expected suggesting that the next move would be upwards for rates and not down towards. the vote is 9-0 to keep rates at 0.5%. let's have a look at more.
the range of views all agreed that -- let's have a look at this. lots more coming out on this news. u.k. house prices rising faster than expected in april saying that inflation is close to 0 and although that is unlikely to last long and they have also commented that financial markets brought forward their own rate rise expectations and that's in line with the hawkishness in the last set of minutes. >> what's interesting is they're also commenting on the level of u.k. 10 year gilt yields. they're low despite the increase since april. so you don't get them commenting on the level of gilt yields too often but in the inflation report they commented quite a bit about the strength of sterling and that has a tightening effect. once again, wins they're a couple of weeks old and they're out dated because we have the boe inflation report last week
and the message that was a pretty dovish one although you could say they don't really know what's happening to the u.k. economy. you have really good indicators. >> so it's a messy picture from the u.k. economy. >> i want to come off one final one for the u.s. economy. they have said inflation weakness will prove temporary and also saying inflation to pick up notefully toward the end of the year so quite an interesting point. we must also remember in terms of the numerical value that the effects will start to come out of numbers when we get to the end of the year and that's something that they're referencing here with that inflation to pick up notably toward the end of the year. >> i wonder when we'll see that
7-2 vote again? maybe next month? >> that was the norm about six months ago. >> don't expect a fed rate hike until 2016. that's according to charles evans that says inflation is still too low to tighten. speaking earlier he struck a more dovish tone just days after saying a june hike could still take place if there was enough confidence in the u.k. recovery. he said substantial wage growth would be a strong indicator to support an earlier hike. >> when are you expecting rate hike? >> january. >> january. i said june or september for awhile which is looking less or less with it. i'll stick with it. june less likely than september. >> i think the market now believes december. fed futures imlying december or january. >> exactly. expectations have gone out a bit but i'm expecting a little earlier than expected although i
have to admit that june is looking less likely. >> bank decisions this week bank indonesia held it's benchmark rates steady citing abundant external risks however they added it would lend to avoid consumption. >> it's expected to remain unchanged at 5.75%. >> like wise the turkish central bank is expected to keep it's benchmark rate steady at 7.5%. the lira has fallen 16% against the dollar at 2.6029. but recently we have seen quite a bit of appreciation as a result of dollar weakness. joining us is the head of em research research. do you think they'll hold off today because we have seen the
depreciation in the lira? >> it helps. so at least that helps them not having to hike or move anything but they'll keep the overall landing rate where it is at the moment. that's going to be remaining in place but the discussion on the fed this is the issue that central banks are having. one month they're going to hike this year and next month they're not. you can imagine for an em central bank it's a very difficult time. especially if they have to deal with domestic politics. >> let's talk about domestic politics. is that having an influence ahead of the election coming up in june? are they wanting to hold off hiking rates ahead of that? >> definitely. any central bank will hold off for any election. you don't want to shake the boat and rock the boat before the election so i think that the central bank is not going to get
involved in this but if we do see u.s. data improve again between now and after the elections in the first week of june then we can see central banks and the emerging markets becoming that much more hawkish. so let's see the elections go by and let's see what they do after that. >> is there a sense that after these parliamentary elections the man tate could weaken and that means the governments pressure on the central bank will be lower as well. >> markets will be reading into what you're saying now. the latest opinion polls show a weakening of the current government standing. so the ruling party standing. the big question has been 2-thirds or three-fifths majority in congress which would allow them to change the constitution. all of these will play into market expectations. you have those looking forward to it and those not looking
forward to it. >> stick with us. we'll talk to you in about three minutes times about the lessons to learn from various em debt crisises for greece. we continue to get mixed messages from athens and it's international creditors. they are confident that it's close. according to reuters negotiations are too slow despite progress in some areas the views of the broader international community in greece must be taken into account. he says a deal at this week's eu leader summit is not on the agenda. this comes as greek finance minister told the conference in athens that the constraints of the official sector were hampering greece's efforts to reach a deal. >> what if we were to admit that
an unpayable debt cannot be repaid. it has to be restructured. this is something wall street lawyers do every day, frankfurt lawyers do every day. they do this in the private sector but in the public sector we have political constraints. lower growth lower income and lower capacity to repay the loans. so this is the political conundrum we find ourselves in. julia joins us with more on this story. we're still in a big conundrum. >> absolutely. i don't disagree with many of the comments he makes but it comes down to timing and what the message still is that even yesterday it was we're not going to back down on pensions and wage reform but the focus is on the ecb. they're meeting today to discuss
the emergency liquidity assistance. they may reduce the amount available. the suggestion is it will go from what's available now around 95 billion euros. it's an incremental decrease. if we look at how much they've been using it gives them around four extra weeks if that's the case. so worth watching. >> okay. great stuff julia. that's obviously the latest developments. stick with us because let's talk about this more. commerzbank suggested that previous debt crisis experiences show that greece cannot reduce it's debt to gdp ratio while it's still in the euro zone. the head of research is still with us. you've done some analysis on this on how various other emerging markets respond and usually leading some years later to lower debt to gdp and
stronger economic picture. why hasn't that happened to greece yet? >> well essentially if you compare greece to all the countries over let's say the past 20 years greece has actually done fiscal adjustments, in other words, from a primary deficit and negative 10% to gdp primary deficit all the way to a primary balance which is actually much stronger adjustment phase than any emerging market countries done in the past. nonetheless, gdp remains at 175% of gdp and that if you compare for example to argentina back in 2001 and 2002 they reached about 140%. at a certain stage an economy cannot take anymore. they can't reach the primary surface targets of 4.5% to gdp in order to get that debt to gdp ratio down. that's what they told us several months ago and that's what markets are telling us now. >> you make the comparison between greece and argentina.
three years in we saw the largest em default on record and even then a month later they allowed the currency to float. what's your view on the situation with greece? is a debt write down is that going to be enough or do you still think being within the euro zone is also an on going problem? >> being within the euro zone helped greece get through this crisis. now it is an absolutely political decision. the euro zone decided to take a number of countries in 20 years ago. all the economic literature at the time said if you don't have an optimum currency level or fiscal union it's going to be difficult to keep countries together in a currency union. so the decision has to be taken sometime between now and june and i think that our belief is that this decision will be taken if you compare it to argentina, argentina had a peg to $1. you could take that as an internal currency peg if you
like to the euro in the case of greece. if the euro zone were able to decide or allow greece to commit the euro zone then you can see what happened. the depegging lead to a move to 3.5 to the dollar. this is the sort of type of dynamics that you'll see if that happens. >> has there ever been a situation where we have seen an emerging market country manage to succeed with the internal deval you wags we've seen in the case of greece too and actually hold on to the peg. i can think of them but their debt to gdp is nowhere near the size of greeces. >> you're absolutely right. it's put matly the size of the debt to gdp. so they could deal with a strong deep evaluation. in the case of bulgaria they didn't need an internal deval
you wags because you haven't had such a depreciation in salaries and real estate prices as you did and there's no real comparison in this case and that's why i choose argentina as a comparison. >> you're also suggesting that investors buy protection on countries that are still exposed to greece likes of turkey bulgaria romania and isn't there a view that other countries are being complacent also? about the spill over effects? >> i think it's very difficult to talk about complacency. this is an unknown factor for the european union as a whole. bul dprks aria is the most exposed. about 25% of the banking sector is owned by greek banks. in the case of romania it's about 15%. they have the largest export exposure to greece and then you have countries, all of these are definitely exposed and if you
look at the political turmoil that's been happening in macedonia then definitely this is something for european politicians to take into account. all of these countries border greece and the european union. >> thank you for your time. head of emerging market research. i also want to thank julia. still coming up on the show drones on patrol. we're discussing the use of uav's in the police force. new york state is reinventing how we do business by leading the way on tax cuts. we cut the rates on personal income taxes. we enacted the lowest corporate tax rate since 1968. we eliminated the income tax on manufacturers altogether. with startup-ny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. all to grow our economy and create
welcome back. sales force is set to report first quarter results after the u.s. closing bell with analysts looking for a near 30% increase in earnings per share. this after the provider reported a loss of one penny in the third quarter. recent take over speculation surrounding the cloud based firm threatens to overshadow the report. speaking of take over speculation, talking earlier, one of the companies rumored to be eyeing a bid said he did not believe sales force would be sold to any competitors citing the group's high valuation. let's get out to annetta.
sap hasn't shied away. why wouldn't they make a bid for salesforce. >> they're saying that the valuation currency which is over 100 times their earnings is far too high to make a bid and they're also saying that this industry where sales force is in itself looks into not a very promising future because the very segment of the industry is consolidating with all the big players that also wanted to have a share in it. remember s&p is expand-- sap is surrounding. they're spending a lot of money. that's a rational that they're not interested at all and they're not alone here. microsoft officially has declined to be interested in offering and taking over sales force. that was previously reported by
bloomberg and also oracle is saying they would be happy if any competitor would actually buy sales force. so interest really sounds different. back to you. >> annetta thank you very much. from spraying crops to delivering packages the use of drones is becoming more widespread. now experts say they could dramatically improve the efficiency of police officers walking the beat. let's get out to seema live in barcelona with more on the story. seema. >> hello wilfred. you know it's only 10:00 a.m. here in barcelona but i already made a friend and i will wait until the end of this hit to introduce him but on a serious note wilfred i want you to imagine that you're an undercover agent that has a target but the location of the suspect that you're trying to hunt down is hard to find based on traffic, location or perhaps weather, but because of technology experts hearsay that in barcelona they're betting
that drones can be a powerful tool used in situations to secure real time mapping through the use of high speed data and high definition video. public safety officials say images mapping and real time data are three important factors needed to make faster decisions when it comes to tracking a target or enabling resources on the ground. it's one of the reasons people to me hearsay that agents fall short of finding their target. so that's one of the reasons motorola solution is betting on drones to improve the public safety experience. they did invest in a company a couple of months ago to use drones as a way to power investigators to track the suspect they're looking out for. also improved mapping technologies. with that said there's a lot of challenges that they face including regulatory head winds as well as costs. i will be speaking to the chief innovation officer to talk about whether they're a viable
solution for public safety officials but it's also important to note that drones are not the only way that technology experts and public safety officials are looking to increase their expertise on the ground. they're also looking to use smart cars behind me over here as well as power the actual agent with technology so that way the control room that's tracking their agent can see what they're experiencing on the ground which includes smart glasses as well as a smart gun. so basically the control room knows when the gun is taken out. they know that the agent is about to fire. interestingly enough i'm not making this up his name is wilfy, interesting. making new friends here. back over to you. >> thank you very much for that. he's a very good-looking chap as well. >> he looks a little bit like you. >> he does. incredibly pale. >> he's quite tall too. >> i liked at the top of the hit that seema said imagine wilfred if you were an undercover agent. kind of like james bond. >> that's what you always wanted
to do. >> sure. exactly. >> and then you end up here. >> maybe i am an undercover agent because i obviously wouldn't tell you. >> i wouldn't say anything. >> we've probably already talked about this too much. seema, thank you for that. we'll be back out to seema later in the show. now the amount of over the counter gold derivatives fell to a ten year low according to the bank of international settlements. the volumes made for a choppier spot rate. many banks have either withdrawn or altered how they participate. here's the price, 1207 at the moment and it has been around the 1200 mark for quite sometime now. joining us to talk a bit more about gold is the executive director. mark good morning to you. thank you very much for joining us. as i just referenced there we have seen it relatively settled around that 1200 mark for quite sometime. do you think markets are pricing in the risks that are present
around the world today? particularly in europe? >> no i don't think so and i think in the light of what you just mentioned, obviously the brexit and overall definition globally we'd have a concern that there's a global financial problem with stock marks all time record highs, bond markets all time record highs. gold prices traded sideways and we believe there's consolidation. looks undervalued. at the same time it could go lower before it goes higher. technically there's a weakness there and i think short-term weakness quite possibly wouldn't need it. >> do you think that because we had a break away from the idea that gold remains a great hedge toward any risk that's out there whether it's inflation, deflation or just big geo political crises or is it just because markets don't understand the risks are present and they're ignoring them. >> for the latter for the moment. it's very much likely 2003
2006 2007 period the imbalances were building up in the system. meanwhile stock markets kept gal vanting higher and gold was an underowned asset and there wasn't a depreciation. i think you're right. that perception of gold it has fallen out of favor. it's probably as bad as we have seen it since the 2003 or 2004 period. it's less on the radar because it performed quite badly. you have to look at the long-term value characteristics of gold and proven hedging instrument and safe haven assets over the long-term but not in the short-term obviously. >> there's no inflationary pressure. we're in a low inflation world. i don't see why gold should be moving past the 1200 level that we have been bumping around over the past couple of months or so
and then a dollar that's moving higher. it's a rough patch for the dollar right now but still moving higher. i don't see why anything we're seeing is more than a bounce essentially. >> you're right. there's no inflation pressures right now and the question is is it going up? probably is. is it a hedge against inflation? it's more of a hedge against serious inflation. you have a potential grexit. the county party risk if you owned actual fiscal assets it is actually a hedge against deflation. so it's a huge body of academic research that shows that you know. >> mark very quickly, your call by the end of this year will be where roughly? >> we try and stay clear but i do think 15 to 20% is very very doable. so i would think 1400 is quite possible. it's better for people to focus
on the value rather than the price. >> lovely. we have to leave it there. we're running out of time. thank you so much. executive director at gold core. now what started out as every man's dream turned out to be a nightmare. earlier this week patrick george a writer for the auto website got a chance to test drive a new high performance chevy camaro in michigan but things didn't go exactly according to plan. >> chevrolet asked us to leave because i wrecked one of the 2016 camaro mules on the track. yeah, today didn't go the way i wanted it to. >> that's not ideal was it? it's the same actually because we can't have any car crashes like that. we're not allowed to do that kind of thing. >> you're not? >> we get to test drive the market walls. quite fun to be in a position
where we might can do something like that. >> i'm going to move on because you're hoping to crash something. >> a car or something like that. >> an old school robbery allegedly in every sense of the phrase. scotland yard said seven suspects have been arrested from when jewelry was stolen from central london. three of the men have connecticut firmed. arrests were made by over 200 officers in what could be the country's biggest ever hike. didn't workout for them. >> indeed it didn't. anyway, we have to go to break. after the break we'll be talking about etsy. shares falling sharply after they reported a massive loss. stay with us here on worldwide exchange.
welcome to worldwide exchange. >> here are your headlines from around the world. >> moving telco. it's into the u.s. market with the acquisition while john malone talks about the benefits of buying vodafone. >> don't expect a fed rate hike until 2016. charles evans says inflation is still too low to tighten. this as investors countdown to the meeting minutes. >> ubs agrees to pay $545 million to settle a probe.
all eyes on barclays rbs, citi and j.p. morgan as fines top $5 billion. welcome you're watching worldwide exchange. it's 5:00 a.m. on the east coast and 10:00 here. i'm puzzled about where the u.s. consumer is. we saw really bad numbers from walmart yesterday. the stock down 5% but then housing starts were pretty good. retail sales were really choppy last week. where is the u.s. consumer? what are they doing with the gas savings? are they putting it aside to pay down debt? are they investing it in housing? i don't know. do you know? >> i don't know for sure but my take on it is the u.s. consumer is not in a fundamentally bad position but definitely in a cautious position. that's probably a pretty good summing up of sentiment in the u.s. at the moment. we've seen equities hit all time
highs again. there's no real reason to be that excited about those types of highs and the consumer yes they have seen oil prices come down and gas bills come down but they haven't hauled that money into consumption an that's probably quite sensible. probably why we're still cautious as to when we will see a fed rate hike and the markets expectations have been pushed back. >> meantime let's have a quick look at futures. slightly lower start to the trading session. the s&p 500 taking fair value into account. the dow jones seen off by 10 and the nasdaq also seen modestly lower. this is after yesterday. another record close rising for the fourth consecutive session. the s&p not closing out a record. it was off fractionally. it did hit housing starts. 7.5 year high in the month of april. also want to show you what the dollar is doing. we are a little bit higher here. we are up by a quarter of 1%.
yesterday we saw the yield at a 2015 high. it was the housing data that drove us to that high. we are at those levels now. and the ten year german yield it is dropping a little bit. we are at 59 basis points. the big slide came yesterday on the back of comments about front loading qe. today it's a little bit quiter actually. >> indeed. yesterday was a big move in markets for all of the securities really bonds, equities and currencies. let's look at european equities. they did see a big move as we just said. we saw the dax and cac up over 2% each. because of those comments that they might front load bond buying purchases for may and
june because of the summer lull. we bring forward a few months worth of purchases over the next few months. we saw them rally hard and we're off now for about.5% but they were over 2% yesterday. sonnet we're still up. ftse 100 only up about 0.4 yesterday is down 0.3% today. let's look at the dollar index. back to a strong path this week having been on a weaker path over the last couple of months. the euro sliding by 0.23% today. it was down about 0.6% earlier in trade. just paired some of the session losses at 11120 at the moment. 120.8 for the yen. headline number of data was strong but underlying data suggested a little more weakness. that pick up was largely due to inventory builds so hard to
engage how strong the recovery is but still flat fr the day after we saw the bank of england minutes. relatively hawkish again. relatively hawkish sentiment saying that inflation will pick up by the end of the year. quick look at commodity rates. the oil price is strong over the last couple of months but continuing to strong this week. not so much because of the rebalancing sentiment we all talked about because of the oil price fall but more because the u.s. dollar hasn't been quite so strong over the last couple of months of course which is keeping the oil price up 1% for wti. 64.8 up 1.2% for brent. let's get an update on markets in asia. sri, over to you. >> hi wilf.
let's start with the japanese market where we're looking at fresh 15 year highs for the nikkei. the market there liked the gdp number for the first quarter. 2.4% annualized growth rate. that was much better than the 1.5% that most in the market were looking for. really surprised on the upside but i think you nailed it in your commentary. yes the headline looked solid but if you dig deeper the devil was in the details. the competition of the gdp number wasn't really that much to write home about. yes it seemed to be boosted by the inventory restocking but there wasn't a great deal of evidence on the capital formation. the capital spending side which is really what is needed by japan to really instill a virtuous cycle in getting that up to the target of 2%. investors didn't look the gift horse in the mouth.
i wanted to talk about the shanghai composite because the leadership was into the north asian markets. it will be a strong session but that was due to the spill over effect for the market. a tech heavy index there. they expanded the number of firms in the benchmark index so we saw some spill over into mainland equities. into shanghai as well. you mentioned australia. quick read there, weaker mining resources broadly and energy stocks brought the index lower. 3.5 month lows. that's where we stand. back to you now in london. >> thank you so much for that. some mna news this morning, altice is setting it's sights on the u.s. market. the company struck a deal to buy privately owned sudden link communications for $9 billion. they are about 1.5 million customers. reports say altice held talks to buy time warner cable which is
also being eyed by charter communications. time warner up by 2.3% in german trading. altice higher by 7.5%. >> vodafone having it's best days since january. john malone said a tie up between the two would make for a great fit. as you can see both are up 3.3% in today's trade. >> meantime united technologies is reportedly in talks to sell it's sikorsky aircraft business. they make black hawk helicopters for the u.s. military and supplies the helicopter that carries the u.s. president. it is exploring either a sale or spin off. reports say that boeing airbus and lockheed martin are among those that may make a bid later this month. higher by .75% in german trade. >> pep point has been approached
by potential buyers. pep boys was founded in 1921 and has more than 800 stores and is struggling amid weakness in the tire business. let's look at trades spiking some 18% in frankfurt today. >> and speaking in munich don expect a fed rate hike until 2016. that's according to evans that says inflation is still too low to tighten. speaking in munic he struck a more dovish tone after saying a hike could still take place. >> as investors brace for volatility ahead of the first rate hike financial group accushares launched a new etf which more accurately tracks the
vix. >> everyone is familiar with the cboe volatility index or vix. now when it's elevated there's more people buying protection against the market. there's been several attempts to create etf-like products that would allow people to buy the vix or volatility. now there's a new product. a firm called accushares introduced two new etf products. one tracks the vix over a month and the other does the opposite. tracks the inverse. so one is long the vix and the other one is short the vix. so far, so good. but there's two questions, number one how much does this cost to get this insurance and how much does it really track the vix? first the cost. there is a management fee of almost 1% a year which is high but not outrageously high. more interesting this second fee, risk insurance premium fee. 0.15% a day.
anyone that's long the vix has to pay to those that are short the vix. why do you have this fee? it's one of the other products in existence that everyone knows is going to spike up. anyone can buy and hold it and make money. no one will sell anyone a vix product unless there's some compensating payment. howell does it track the vix? >> it seems to track closely. the problem is over longer periods like more than a week. that .15% starts to eat into profits. so it's a short-term investing tool. >> it's a tactical trading tool. it's not a buy and sold asset. if you hold it for a length of time you'll have to payday after day after day and that will erode the value. >> accushares is planning to launch several commodity etfs that will more closely track the underlying prices of commodities. that will allow you to told them
indefinitely. that would be a major advance. >> let's get to jack. he's the ceo of accushares. the founder of the vix, has been very critical of the etfs on the vix. why are they any better for the retail investor? >> that's right. our fund structure is different rather than relying on a complex futures trading regime we have put the buyers of vix that would be the investors that would buy them along with the sellers of vix, the buyers and put them together in a single fund which is more transparent. >> the costs are still very high. how do you justify the high costs? >> the cost of holding the vix over the course of one day is
15%. what we like about the funds that we have come out with is its very transparent to the buyer of the vix and seller of the vix and the cost of ownership for a single day or multiple day period is known ahead of time. >> okay so for the average trader out there this still isn't an ideal way to trade it is it? it's a much shorter term instrument. >> it is. it's meant to be a tactical tool. the other thing to think about is the volatility of the vix itself and it's propensity to move. it moves about 5% per day. even in q-2 where we have vix levels that are very low. 12, 13 or lower. it still moves with order of magnitude of about 5% a day. factoring in that with a 15
basis point exchange between shareholders and a nominal amount given the volatile till or propensity of the extra move. >> where's the underlying vix? where is it headed? what do you think? >> it's been range bound and it may continue to be range bound. a low level is consistent with market continuing to hit all time highs. again we think they're still rich. the vix is still moving to the degree magnitude it moves when the levels are high. we're still seeing 5% moves. it's as useful as it's ever been. >> all right jack thank you for your time. appreciate it. the ceo of accushares. >> coming up later in the show we're discussing drones on patrol. seema is in barcelona with a quick preview. >> wilfred from connected cars to smart glasses that track
biometrics to lte radio as well as drones we are going undercover here at the critical communications conference in barcelona helping you understand how public safety officials are building actionable intelligence to catch the bad guy. giving you a run down of all the technology and more coming up on worldwide exchange. we're back in two minutes.
welcome back. let's give you headlines. chicago fed reserve president says inflation is still too low to tighten. altice taps into the u.s. cable market with the acquisition of suddenlink and investors dump etsy after a big miss on its first set of earnings since it's ipo chlts . >> let's stick with etsy. the company reporting a bigger than expected first quarter loss. the first report since going public in april. results were hurt by higher costs associated with restructuring and the online seller also posted lower sales. etsy is warning of higher expenses as it ramps up hiring and spends more on marketing. shares fell 17% in after hours. ipo still up around 30%. >> sales force is set to report first quarter results after the u.s. closing bell with analysts
with a 30% increase nernings per share. recent speculations threatens to overshadow the report. but speaking earlier, the ceo of sap said he did not believe sales force would be sold to any competitors. let's get to annetta who has more on the story. >> well, looking at the share price of salesforce it's not likely that there will be any bid from any competitor because the shares have risen 48% over the last 12 months and the valuation is even higher. it trades at nearly 100 times earnings or more actually. that compares to for example, a pricing for microsoft which equals that multiple of 19. so you see a huge discrepancy and sales force is priced very
expensively and that's what he was saying. he does not think that any competitor would actually voluntarily take over sales force at that price. as the market currently where sales force is operating and it's number one in the customer relation management tools market it's worth 23 billion u.s. dollars where it's valuation on the market is actually more than double on that market side so it's a little bit of a puzzle i'd say. for that back to you. >> thank you for that. still to come on the show buying bitcoin? the world's first bitcoin security launches in stockholm. we speak to the ceo behind that move. that's coming up next, don't miss it. the network that monitors her health. the secure cloud services that store her genetic data the servers and software on a mission to find
lacked an easy and secure way to access bitcoin. we thought about the best way to do this and we had several different alternatives but after analyzing the different opportunities we decided to start with bitcoin chapter one which is the first of several more products to come but it was an easy way to get new clients in to bitcoin. >> i'm just curious who are the investors in that? the mom and pop retail investors or the sophisticated investor base who is it? >> basically anyone can trade. so the etn missed it on the change and open for all so retail clients traders, institution institutional clients funds. >> we have seen a huge
volatility in bitcoins and i'm wondering why it would be a good investment in the tracker if we have no visibility on what bitcoin is actually doing. >> this is a question that i get several times a day and you have to be very careful when investing in high volatility instruments of course but it's more and more interest every day. new investors with inquiries from really large institutions that want to do very large orders and i think it can be an absolutely fantastic opportunity to get into bitcoin now because we believe this is the future of money. >> thank you for your time. best of luck of that. >> a norwegian cruz line ship are back in bermuda today after the ship run aground on a reef on tuesday. the company says everyone on board was safe. the ship was freed from the
rising tide after being stuck more than six months. it's awaiting inspection for any damage. it was on a seven day voyage from boston to bermuda. >> 21,000 gallons of oil has been spilled into the pacific ocean from a broken pipeline off the coast of central california. the spill occurred on tuesday. the u.s. coast guard says it stretches about four miles along the beach which has now been closed. it's owned by planes all american which regrets the incident and is making any effort to limit the environmental impact. >> mcdonald's is expected to gather outside the shareholder meeting in chicago today and tomorrow. they're calling for a minimum wage of $15 an hour. new mcdonald's ceo announced plans to increase wages to just under $10 an hour. the protests came as the los angeles city council voted tuesday to raise the minimum wage to $15.
joining chicago, san francisco and seattle. >> still to come on worldwide exchange a match made in heaven. liberty global's john malone fuelled speculation over a merger with vodafone. we bring you expert analysis. let's have a quick look at u.s. futures and how they're fairing ahead of the open. s&p 500 is lower. dow jones is higher on the nasdaq and up by 2 points. this is after we saw another record high for the dow in yesterday's trading session.
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welcome to worldwide exchange. >> here are your headlines from around the world. >> transatlantic merger talk. altice into the u.s. market with the acquisition while liberty global boss talks up the benefits of a tie up with vodafone. >> tonight expect a fed rate hike until 2016. charles evans says inflation is still too low to tighten. this as investors countdown to the fomc meeting minutes. >> keep calm. that's yahoo!'s message to investors after fears send the stock lower but any change will not effect it's alibaba spin off. >> sap's ceo rules out a bid for
sales force and doesn't think anyone else will make an approach. this ahead of the companies earnings. >> good morning, everyone if you're just tuning in. thank you for joining us here on the show. let's have a look at u.s. futures. they turned around in the last half hour. the s&p 500 now just seen off fractionally taking fair value into account. the dow jones higher by 7 points and nasdaq up by 7 points less than 0.1% with yet another record close. housing starts the highest in 7.5 years in the month of april. that did help sentiment some what some of the retailers are underperformed a little bit. just hitting the 7,000 level. they're down by roughly 4% after a very cautious outlook and even though it announces share buy
back seen a very cautious trade this morning. elsewhere we are seeing a little bit of a bull pack. the dax off by a third of 1% after the big rally yesterday. of course that was on the back of the comments about front loading some of the qe. cac 40 also off by a third of 1%. plenty of activity in the space. more about that in a few minutes. also want to show you what the euro dollar was doing this morning. we did see a little bit of a dip here. that was after german ppi numbers were out weaker than expected. we have recovered since. friday we were at 114. thank you ecb. >> thank you indeed. let's have a quick look at the oil price which is strong today. wti is at 58.6. that's up 1%. let's bring it all together. let's see what we think about
markets in general. i have to say i'm bearish at the moment. i can't believe we've seen u.s. equities continue to touch these record all time highs in the face of nothing particularly exciting. i'll add especially in the next couple of days when we see how that fuelled european markets. it refuelled the euro dollar to go back to the qe in europe related trade and for me it just highlights again something that we're all aware of but it brings it home again how markets have just been driven by quantitative easing policy and in the u.s. we're still hitting these all time highs and we're about to face a rate hike. >> the bar one very high though. we were at record highs at the start of this year. >> exactly. the earnings season was better than expected. everyone was concerned about the strength of the dollar and decline in earnings. we did see surprises there and it seems as though companies are better in the face of dollar
strength. we're seeing the negative announcement about what the impact of the stronger dollar will do in the future but they're doing okay. >> i disagree quite strongly with that. i think yes earnings did beat some expectations. and on top of that we have seen in all the consumer prices come off it hasn't fed through and it will pick up much more sharply than expected. it comes very very quickly on to rate hikes. >> we'll see what the fed minutes show us today. if they show us we're seeing a dovish tilt and that wouldn't be a surprise given that since the last meeting we have seen a number of really bad -- we have seen a number of really bad announcements for the u.s. economy. bull markets rally or will they not? are we still on this risk on
risk off scenario and when bad data for the markets. >> i don't think it's justified. anyway, we are being told and have been told for a few minutes now that we need to move on. let's look at the other big stories of the day. recent speculation threatens to overshadow the report. but he says he did not believe they would be sold to any competitors. >> shares fell sharply tuesday on concerns that changes to tax rules could impact the spin off of the stake in alibaba. they're considering changes to
spin offs and may suspend new requests. yahoo! understands any potential changes won't effect spin off requests that have already been submitted. yahoo! called a request earlier this year to split it 15% stake in alibaba to its company. 30 million yahoo! shares change hands and in the final minutes of trading on tuesday shares down 7% today in frankfurt off by 4.5%. >> from spraying crops to delivering packages the use of drones is becoming more widespread. now they can have police officers walking the beat. let's get out to seema in barcelona with more on the topic. seema. >> hey wilfred, we talk about how drones can improve the e-commerce delivery model but it's evident here that many industry experts say the drone could be a powerful device to improve public safety which can help them make smarter decisions
to enable teams on the ground to make better decisions. i was speaking to a former official telling me the highest amount of mistakes are made when officers don't have access to real time data. plus on the ground the location of the suspect many times changes as well as the actual facial recognition you have on that person. to they recently invested in sci-fi. a drone maker that can provide facial recognition which can be used as intelligence by the on the ground team and is also relaying information down to the agents that were on the field. there are a couple of challenges that motorola solutions face trying to improve public safety.
the other is cost. when it comes to public infrastructure and technology that's funded by governments of various cities and countries. it comes down to how much each government wants to allocate toward technology and drones. >> thank you very much for that. we're going to change tact very quickly now because we were talking earlier about what our favorite cities in europe are you have been to quite a few now. is barcelona with your favorites? >> i've been there twice since moving to london. it's high on my list but you know how much i'd like to climb mountains. that's what i did in iceland. it's fascinating and a fun experience. it's on the top of my list. i'm pretty sure you wouldn't have expected it. >> that's right.
my favorite has to be rome. >> paris is overrated. london we all want to live here. >> it's the best city in the world. >> thank you very much for that update. now up next a transatlantic cable deal is sealed. french telcom operators buying spree may not be over. all the details after the break. tlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money.
it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. because it's so challenging a research project is teaching ibm watson to see. in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day.
>> it's been less than a month since the cable merger fell apart but it isn't slowing down as a big transatlantic deal is struck today. >> good morning, altice agreed to buy them. they're buying 7% from the current owners. and investment board will keep a 30% stake. the deal which is expected to close in the fourth quarter will be financed with about 6.7 in new and exiting debt. it suddenly gives the 7th largest umplt s. cable operator with 1.5 residential customers. it generates more than $2
billion in revenue last year. it may not be done but also had talks to buy time warner cable. that would be a much bigger buy and has a market cap of about $44 billion. altice would also face competition as reports say charter communications is interested in it's rival. it's controlled by the french billionaire who once worked for cable mogul john malone. he turned the company into a serial acquirer. shares of altice are 7% higher in europe today while time warner cable is up more than 2%. and there's other mna news brewing today. reports say united technologies is in talks to sell sikorsky unit. boeing airbus and lockheed are are set to be interested but a deal tied to the sale could dampen their interest. it's up less than 1% in europe. pep boys has been approached by
buyers including golden gate capital. they have more than 800 locations but it's struggled with weakness in it's tire business. it's not clear whether it wants to sell. it's up 18% today. >> landon thank you very much. >> meanwhile, vodafone shares having the best day since january. he said a tie up between the two firms would make a quote, great fed. joining us on the phone is the media equity research analyst. do you think that malone is really trying to test waters here and gauge the reaction from shareholders? maybe that tells us a tie up is more or less imminent. >> definitely. he's been in this business long enough that he knows what will be the reaction to his remarks. he's absolutely right that a deal between liberty and
vodafone makes sense for both players players. it would make sense to bring them together. >> would that be a financial problem for vodfone? what would the terms look like? how much of a premium would you expect them to pay? >> it depends on the structure of the deal. one interesting thing you have seen, this is not to say this is what they'll do but there's been a greater appetite on the part of investors that is used to fund transactions seen as attractive. i don't think it will be a
particular issue for vodafone. there's a question mark as well in terms of are there any other ways they could structure the deal as well. i don't think if you have a deal such as this deemed to have good strategic benefit i don't think the financing will be an issue. >> there's two implications here. one is that vodafone was mentioned as a potential buyer previously. if this happened one of the main potential buyers. but the second thing of course is that you look at what this means for markets such as the u.k. and then suddenly you have a position where sky goes from being the largest operator and biggest beast in terms of the
u.s. market to have been the smallest. on one hand you have bt and on the other hand you don't have a vodafone media combination which is powerful as well. implications in germany and italy as well. so no i think to sky they will be looking at this with quite worried eyes. >> just very briefly do you think there will be any regulatory hurdles? >> for the liberty vodafone? >> yes. >> the only issue you might get is in germany in terms of some of the assets there. just given what liberty has and what vodafone has and then your question before about financing if there was an issue some of these assets could be sold as well. but in markets such as the u.s. for example we don't think there will be any regulator issues whatsoever. >> thank you so much for that.
>> before we head to break let's remind you of the headlines at this hour. the countdown to fed minutes is underway as charles evans says inflation is still too low. altice taps into the u.s. cable market by taking a controlling stake in southern link and investors dump etsy on a big miss since the first set of earnings since the ipo. we're back in two minutes. ♪ building aircraft,
penalties. makes you wonder if it's worth being a whistleblower? that's what they did in the case but then they saw wait a minute you have been manipulating a number of markets. >> but that's probably fair particularly where public opinion is at the moment. but overall if they can draw a line under these issues as well. >> you're right. >> we're a little bit soft. yesterday was a strong day. we saw the dax and cac up over 2% east after comments to suggest bond buying pace would pick up. today just coming off those strong gains yesterday.
>> the ftse is flat. >> u.s. futures equally this morning. the dow jones that saw another record close rising for the fourth consecutive session is seen higher. >> don't expect a fed rate hike until 2016. that's according to charles evans that says inflation is still too low to tighten. speaking in munich he struck a more dovish tone days after saying a june hike could still take place if there's enough confidence in the u.s. recovery. the april meeting minutes are out later today. >> investors will be keeping an eye on a few big factors with those minutes. the main question is the timing of the first rate increase and might be more detail that sheds light on what officials were thinking. the out look for economic growth could be modified and employment growth has cooled and minutes may indicate whether fed officials consider that to be a
blip or longer term problem and watch out for insight into how officials are interpreting inflation data. joining us now is david cio of matrix asset advisors. good morning to you. do you think the fed minutes are important at all? they're outdated and we've seen a continuation in the bond route and more disappointing data. >> we think the market is obsessed with them and will focus on them but we're not expecting anything dramatic or new to come out of them. it's going to give the fed a lot of flexibility. >> we're once again at record highs. what do you think? do you want to continue to buy into those rallies or do you want to wait for another pull back? >> ultimately 2015 will be a goodyear for stocks. we would not chase rallies. you just had the market move up about 3%. we don't think you have to chase this rally.
we would be prepared to put money to work. any type of full back or sell off. >> what do you make of the recent one on that side and also earnings out of companies like walmart. >> well the economic data has been mixed in retail. lower oil prices didn't translate into better consumer spending. overall u.s. earnings were good and companies beat expectation and they lowered guidance some but not as much as we feared or expected. it's better to beat earnings. they don't have to be robust but they have to be better than current low expectations. >> all right. what are you doing sector wise then? are you buying the losers of the first couple of months? what are you doing? >> we think that actually makes a great deal of sense. we do believe there's going to be a sector rotation.
the financials whose earnings were good. they were up 10% quarter over quarter had a very miserable first quarter and haven't done too much. we think that's a group poised to do a lot better this queer. so we'll be putting money there into the big banks and the brokers. we also like industrials in energy. we think energy prices are going to surprisingly move higher in that environment. we think energy stocks can do well and industrials, a lot of them were brought down with lower energy prices. we think we'll do better with higher energy prices and improving global economy. >> qualcomm is one of your top picks. tell us why that is? >> well one of the themes we think is going to play out is a continuation of activism. we think it's a great company. it is selling at 14 times earnings and we think the position in the company is going to put a lot of pressure on management to do better for shareholders. and a significant amount of
stock. they have been raising the dividend. they'll do a lot ofst cocutting cost cutting. >> have a lovely day. cio of matrix asset advisors. >> on a programming note larry summers will be joining the team on squawk u.s. after 7:00 a.m. eastern. don't want to miss it. >> plus meg has an exclusive interview with alex gorsky at 8:00 a.m. eastern time ahead of the analyst meeting. >> target is reporting first quarter earnings before the opening bell. john mulligan will sit down for a first on cnbc interview. that's today at 12:50 p.m. eastern time. >> that's all we have time for today here on worldwide exchange. thank you for joining us. >> taking a look at futures, they're looking a little bit mixed and the stoxx europe 600, it is down just fractionally below the break even line. we'll see you tomorrow.
it's wednesday, may 20th 2015. and squawk box begins right now. ♪ >> live from new york where business never sleeps this is squawk box. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. our guest host today has a new book out today about america's role in the world. we do have a lot to talk to him about in a few minutes. thank you for being here. a developing story out of california today. environmental clean up crews responding to an oil spill in santa barbara county. coating rocks and sand along a portion of the beach. officials say about 21,000 gallons of crude oil left an oil slick about four miles wide. that came from a